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Additional Reading from MarketBeat
Big Bank Earnings Gave Financials a Lift, But Wall Street Is Still CautiousWritten by Jessica Mitacek. Originally Published: 4/22/2026. 
Key Points
- Goldman Sachs, Wells Fargo, Citigroup, and JPMorgan all posted Q1 2026 earnings beats, signaling potential undervaluation across major financial stocks.
- The financials sector has shed nearly 4% year-to-date in 2026 but has rebounded more than 7% over the past month amid strong bank earnings.
- Analysts remain cautious despite the earnings beats, with mostly conservative price targets and low expectations for Federal Reserve rate cuts ahead.
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The financials sector has not been kind to investors this year. Following a strong 2025 that saw it finish third in the index, the group has been the worst performer among the S&P 500’s 11 sectors so far in 2026, posting a year-to-date (YTD) loss of nearly 4%, as measured by the Financial Select Sector SPDR Fund (NYSEARCA: XLF).
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But over the past month, financials have appeared to turn a corner after posting a gain of over 7%. That momentum can, in part, be attributed to the lead-up to big banks’ earnings week, which kicked off on April 13 when Goldman Sachs (NYSE: GS) reported first-quarter results. For investors watching the sector for a potential bounce, here’s what we learned from the largest financial institutions. Goldman Sachs: Earnings Growth Hints at Undervalued SharesGoldman Sachs' Q1 2026 results may be enough to help the 157-year-old investment bank break even for the year. That would build on recent momentum: GS shares have gained more than 16% from their YTD low on March 13 as they rallied into last week's earnings release. The firm reported earnings per share (EPS) of $17.55, beating analyst expectations of $15.92, and revenue of $17.23 billion, topping estimates of $16.66 billion. While both figures were welcomed by shareholders, the revenue beat stood out, showing a 14.4% year-over-year (YOY) increase. The earnings beat marked the bank’s 11th consecutive quarter of exceeding analyst expectations. CEO David Solomon noted in his earnings call comments that EPS, revenue, and net income were the second-highest in the company’s history. Notably, Goldman Sachs’ Global Banking & Markets segment and its Asset & Wealth Management unit reached record revenues and record assets under management, respectively. Solomon did flag near-term headwinds, including geopolitical unrest and uncertainty around how higher energy prices could affect growth. Still, he said the bank “is extremely well-positioned to navigate this current environment.” Goldman Sachs’ earnings are forecast to grow nearly 11% over the next year, from $47.12 per share to $52.07 per share. The stock looks increasingly undervalued given its current and projected earnings growth. Big Banks Mirror Goldman’s Lead, Post Notable Earnings BeatsFollowing Goldman Sachs’ results, Wells Fargo & Company (NYSE: WFC), Citigroup (NYSE: C), and JPMorgan Chase & Co. (NYSE: JPM) reported on April 14, with all three posting earnings beats. While only Wells Fargo missed on revenue, it still delivered top-line growth of 6.4% YOY. JPMorgan and Citigroup posted YOY revenue increases of 10% and 14.1%, respectively. For each firm, the earnings beat marked the ninth consecutive quarter of EPS exceeding analyst expectations. More importantly—as with Goldman Sachs—the Q1 beats suggest potential undervaluation, especially when paired with each stock’s P/E multiple and expected earnings growth over the next year:
Wells Fargo: P/E 14.67, expected EPS growth of 16.64% Citigroup: P/E 17.26, expected EPS growth of 25.5% JPMorgan: P/E 17.31, expected EPS growth of 7.29% Citigroup looks particularly attractive after four of its five core businesses delivered double-digit revenue growth. Management also signaled confidence by repurchasing $6.3 billion of shares in Q1 as part of a $20 billion buyback plan. Like Goldman’s leadership, Citigroup CEO Jane Fraser warned that the fallout from the Iran war has increased the risk that inflation could slow growth and push central banks toward more restrictive monetary policy. Wall Street Remains Reserved on FinancialsDespite the earnings beats, analysts remain cautious on these four bank stocks, issuing mostly conservative price targets. Wells Fargo and Citigroup both carry consensus Moderate Buy ratings, but only Wells Fargo’s average 12-month price target implies a double-digit gain from current levels. Expectations for additional Federal Reserve rate cuts are low, which should allow banks to sustain improved net interest margins if rates remain steady. Consumer spending cited in multiple banks’ earnings calls also supports the outlook. If the week ends with a clean sweep of earnings beats, it could be the catalyst financials need to change the narrative for the rest of 2026. |
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